Should The Japanese and European governments assist automakers with demand growth ?

An article in the Wall Street Journal (September 15, 2012) describes a request by the CEO of Nissan, Carlos Ghosn, to the Japanese government to intervene to make the yen exchange rate more favorable to local production and encourage alternate fuel powered vehicles. Similarly, the CEO of Fiat, Sergio Marchionne, wants European governments to act in concert with automakers to reduce excess capacity. Under what conditions does it make sense to use the government to assist the auto industry supply chain ? Do governments and their desire to protect domestic employment warrant their management of regulations and coordination ? How should the possible worry of increased consumer prices with lower capacity be balanced with job growth due to a profitable industry in making such government level choices ?

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About aviyer2010

Professor
This entry was posted in Global Contexts, Operations Management, Supply Chain Issues, Sustainability and tagged , , , , , , , , . Bookmark the permalink.

One Response to Should The Japanese and European governments assist automakers with demand growth ?

  1. The concern I have is “help us with our excess capacity.” There is a global demand for automobiles, and I would presume it is quite independent of who has capacity. (It would be interesting to see a study on that…) I would rather let the market take care of these capacity issues.
    The only way I could see governments stepping in to “reduce excess capacity” is by picking winners and losers by shutting down plants. This could be necessary if unions have the power to keep plants open.

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